This week, Apple hired a prominent executive, John Giannandra, from rival Google to lead its artificial intelligence efforts. It's a big step for Apple, because artificial intelligence is an area where analysts say the tech giant has lagged behind its rivals in research and recruiting.
It's also a big deal for entrepreneurs, because we can learn a lot about hiring strategy from Apple's move. When filling a leadership role in your business, you can either follow Apple's lead and hire from outside, or you can promote from within, a move favored by the likes of Google, 3M, and GE.
Most entrepreneurs rely on both paths to fill leadership roles. But when should you do one over the other?
Top-down hiring refers to a person from outside the organization being brought in to assume a leadership role. The main advantage of top-down hiring is that it brings in fresh ideas, fresh insights, and fresh energy. It can also remove a key asset from a direct competitor (in Giannandra's case, Apple's gain was Google's loss).
The other key advantage of top-down hiring is that you can hire someone who has already held the role you're filling (Giannandra has the same job at Apple that he had at Google) and thus are acquiring a known commodity--someone who has already proven they can do the job. The main disadvantage to top-down hiring is that the new hire may not be a strong fit for the culture of their new employer.
Bottom-up hiring occurs when junior employees are promoted from within, rising to the challenge of the new role. This approach rewards effort, accomplishment, and internal success.
Hiring from the bottom up secures internal corporate culture while at the same time encouraging other employees to rise the occasion when they realize that they, too, can be promoted. While bottom-up hires tend not to have issues around cultural fit, promoting a junior employee often means asking them to fill a role they have never held, and not everyone can do that. This means some promoted employees can get in over their head.
The other key disadvantage of bottom-up hiring is that it doubles down on current culture and ideas, instead of bringing in new, fresh energy. Over the long term, this can result in groupthink and a lack of innovation.
When is each path best?
If your business is lagging or struggling, or even if things have gone horribly wrong, then top-down is the way to go. You can shake up the area of your business that is struggling and inject new ideas and energy into the mix. That's what Apple did when it hired Giannandra--it addressed a weakness that had been highlighted by analysts.
Alternatively, if your business is doing well, and you want to double down on what is working, bottom-up is the way to go. Google does this when it promotes engineers from the front line to leadership positions.
As with most things, hiring is never all one way or all the other. Apple, Google, Amazon, and their ilk are growing too fast to rely on only one recruitment path. Instead, leaders at these companies leverage both bottom-up and top-down hiring based on the role, the business unit's needs, and the available talent pool.
If you're struggling to find traction, I suggest top-down hiring. By stealing a key employee from a business in your field that is succeeding, you have a greater chance of making the right course correction in your business.
If you're already excelling and looking to grow your company, I recommend a bottom-up approach. It will encourage your team while at the same time ensuring little or no disruption to the culture and progress of the business unit.
Regardless of whether you hire from within or steal from others, human capital is the most important resource in a knowledge-based economy. So, make sure you get it right.